7. Meta Platforms Inc (NASDAQ:META)
Number of Hedge Fund Holders: 246
Trailing 10-Year Returns: 23.14%
Meta Platforms Inc. (NASDAQ:META) is one of the elite stocks in the Vanguard 500 Index Fund Investor Shares (NASDAQ:VFINX) that Barack Obama held stakes in during his time in office.
In the first quarter, Meta Platforms Inc. (NASDAQ:META) reported a 27% increase in revenue, reaching $36.5 billion, with a significant 97% of this revenue generated from ads. Looking ahead to 2024, Meta’s ad revenue is projected to grow by 17%. Reels, which has been showing strong performance and engagement recently, experienced a 20% ad load in the first quarter, up from 16.2% in the same quarter last year.
The social media giant has been drawing attention for several reasons. For example, BMO Capital has maintained its Market Perform rating for META following an interview with Instagram Head Adam Mosseri. The interview revealed that Instagram is boosting performance bonuses for content creators and underscored the potential need for new revenue streams within the app. Additionally, the U.S. Supreme Court is reviewing a shareholder lawsuit against Meta Platforms Inc. (NASDAQ:META), led by Amalgamated Bank, which alleges misleading information about user data misuse in 2017 and 2018.
Conversely, Mizuho analysts have raised concerns about potential challenges for META stock in a recent research note, despite maintaining a bullish stance. Mizuho is particularly worried about possible announcements during the upcoming July earnings call. They expect the CEO to discuss increased capital expenditures (capex) for AI and metaverse initiatives, which could be negatively received by investors.
In the March quarter of this year, Insider Monkey’s data indicated that 246 out of the 919 hedge funds tracked had purchased and held shares of Meta Platforms, Inc. (NASDAQ:META). Among these, Rajiv Jain’s GQG Partners emerged as the largest stakeholder, with a $5.58 billion investment in the company.
RiverPark Large Growth Fund stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its first quarter 2024 investor letter:
“Meta Platforms, Inc. (NASDAQ:META): Meta was a top contributor in the quarter following fourth quarter earnings results in which the company reported accelerating revenue growth and expanding margins driven by a rebound in online advertising and strong user growth. On February 2nd, Meta reported 4Q23 revenue of $40.1 billion (+25% y/y up from +23% in 3Q23) and EPS of $5.33 (+203% y/y), and the midpoint of 1Q24 revenue guidance was $35.8 billion (+25% y/y), all well ahead of investors’ expectations. The company reported impressive revenue acceleration in its core advertising businesses, including new products like Reels and Threads. Advertiser adoption of Meta’s AI targeting tools helped drive strong ROI and higher spend across multiple categories.
META owns multiple social media platforms, each with more than one billion users, has an 81% gross margin, and generated $44 billion of FCF in 2023. Both its Facebook and its Instagram franchises have more than 2 billion Daily Active Users and generate the bulk of the company’s revenue. Recently, the company’s short form video offering, Reels, and public text-sharing app, Threads, achieved mass user engagement and growing advertiser adoption which have helped return the company to strong revenue and free cash flow growth. Even after the recent stock price advance, META shares trade at 20x Wall Street’s consensus estimates for 2025 EPS, estimates that we think could prove to be too low.”